Optical chips are once again attracting major stocks! Up nearly 13%, hitting a new all-time high

This morning, China’s A-share market saw a broad-based rally, with more than 4,500 individual stocks rising, and the Shanghai Composite Index returned to the 3,900-point level.

As of the close this morning, the Shanghai Composite Index was up 0.88% to 3915.49; the Shenzhen Component Index was up 1.37%; the ChiNext Index was up 1.26%; and the STAR Market Composite Index was up 1.06%.

Technology stocks showed strong performance, with the leading optical chip company Changguang Huaxin rising nearly 13% this morning and its intraday share price hitting a new all-time high; sectors such as non-ferrous metals, power, and broad consumer goods led the gains.

Technology stocks strengthen

This morning, technology stocks performed strongly, with the computing power industry chain and the semiconductor industry chain leading the move. Among them, sectors such as optical fiber, optical modules, storage chips, and advanced packaging strengthened. Sectors including AI applications and consumer electronics rose as well.

In the optical chip field, after Yuan杰 Technology, another major “bull stock” has emerged. Changguang Huaxin rose nearly 13% this morning, and its intraday share price reached a new all-time high. Since the stock rebounded from the mid-September 2024 low, its cumulative gain has exceeded 835% to date. Yuanjie Technology rose more than 3%, and its intraday share price also reached a new all-time high.

Storage-chip leader Designally, and 佰维存储 rose, and their intraday share prices each hit new all-time highs.

On the evening of March 24, 佰维存储 announced that the company has signed a routine operating procurement contract with a certain storage original equipment manufacturer. Under the contract, the company agreed to purchase a certain type of storage wafer from the supplier according to the quantity, price, and timing stipulated in the agreement. The total committed amount under the contract is $1.5 billion, and the committed purchase period totals 24 months.

According to CNews overseas information, due to the concentrated demand for high-bandwidth memory (HBM), DRAM supply for general-purpose servers is in shortage, and its operating profit margin has already exceeded that of top-tier HBM products.

It is understood that major technology companies, including Amazon Web Services (AWS), are urgently purchasing the required memory via paying additional premiums in order to maintain the operation of existing servers. In this seller’s market environment, Samsung Electronics and SK hynix are in negotiations with customers on long-term supply agreements (LTA) for a period of 3 to 5 years, aiming to lock in supply volume and pricing.

Market research firm TrendForce believes that the equipment investment of the three major memory manufacturers is unlikely, in the short term, to produce a substantial effect on capacity expansion, and the additional capacity added by Samsung Electronics and Micron also is unlikely to form effective supply in the market before the second half of 2027. Typically, it takes 1 to 2 years for storage chips to go from equipment investment to mass production.

Delayed capacity expansion is also constrained by physical bottlenecks. HBM production requires a large number of wafers, and increasing wafer supply would require at least 4 to 5 years. In addition, building overseas new plants also needs to resolve issues in advance such as power supply, water usage, construction conditions, and staffing with engineers, making it difficult to respond quickly to market changes.

Non-ferrous metals sector rises

This morning, the non-ferrous metals sector rose. The precious metals sector surged, and sectors such as industrial metals and minor metals also followed higher. The two major bellwether stocks, Zijin Mining and Luoyang Mo, strengthened.

The non-ferrous metals sector has been adjusting consecutively recently. The main reasons are that since the outbreak of geopolitical conflict in the Middle East, factors such as shipping disruptions in the Strait of Hormuz have led to a short-term rise in oil prices, directly pushing up U.S. energy costs and inflation expectations. The earlier market narrative of stable rate cuts was undermined, placing downward pressure on gold in the short term, and the subsequent strengthening of the U.S. dollar also exerted strong suppression on gold prices. Industrial metals such as copper and aluminum are facing a double squeeze from rising costs and weakening demand.

However, institutions still remain optimistic about the outlook for the precious metals sector. Guosheng Securities stated that, on the one hand, if geopolitical conflicts ease, gold has a rationale for catching up; on the other hand, if geopolitical conflicts continue to intensify, investors may start to focus on the risk of stagflation after oil prices break through a certain threshold. Even if major global central banks raise interest rates, they will still face many constraints. After the slope of inflation moving upward exceeds the slope of rate hikes, gold will strengthen significantly.

Qianhai Open-Source Fund stated that the valuation of the non-ferrous metals sector has already clearly fallen, and the risk of previously overly crowded capital and sentiment has been released to a certain extent. Looking at the medium to long term, the strategic value of non-ferrous metals remains prominent. From the supply side, global capital expenditures in the mining sector are insufficient, and mine development cycles are long, limiting the release of core industrial metal production capacity. Meanwhile, the demand increase brought by global energy transition (power grid upgrades, new energy vehicles, AI computing centers) is explosive; once macro pressure eases, the supply-demand pattern will once again become the main driver of prices.

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